| |
Safety
Should Be Everybody’s Business — Don’t Underestimate The
Value of Employee Safety to Your Organization
By Timothy C. Healey
Regardless of the
size of your enterprise, or how you chose to measure it, the safety of
each and every employee is crucial to your organization’s success. No
matter how sophisticated the operations, activities, communication and
data processing systems become, they are designed, maintained and operated
by people. It took people to establish the business, to provide the
services or fabricate the products, and to get them to the customer. When
problems are encountered, it will take the efforts of your human resources
to resolve them. The
Need for Planning is Clear The importance of
having an emergency plan, disaster recovery plan, or business continuity
plan cannot be overlooked to minimize the negative impact of potential
natural or manmade disasters. It has been part of the Occupational Safety
and Health Administration’s regulatory requirements since 1980 (see
OSHA’s Employee Emergency Plans and Fire Prevention Plans, 29 CFR
1910.38). The need for planning has been reinforced by the lessons learned
in the aftermath of the terrorist attacks on 9/11 and catastrophic natural
events such as hurricanes, tornados and earthquakes. Your
Employees Must Come First But the best plans
are useless if you don’t first move to protect the safety and health of
your employees. To this point, consider how fire drills or plant/building
evacuation drills are practiced: sound an alarm to alert everyone to a
dangerous situation and get them moved to a designated location of safe
refuge, so that trained responders can deal with the problem. Buildings
can be repaired. Files can be backed up. Product can be warehoused at
alternative locations and transported. But the protection of your
employees must come first, if any of those recovery operations are to be
addressed. The Financial
Impact of Worker Injuries and Deaths In reviewing national
data from the Bureau of Labor Statistics (BLS) and the National Safety
Council (NSC), the economic costs of occupational deaths and injuries in
2003 were estimated at $156.2 billion. This translates into an additional
$1,120 in goods and services each worker needed to produce to offset this
expense. Further, the BLS and NSC estimated that each workplace fatality
costs employers $1.11 million, and each disabling injury costs $38,000.
(These estimates include lost wages, medical expenses, administrative
expenses, and other employer costs, but do not include property damage.) Lost
Productivity, Higher Costs, Unhappy Customers In addition, consider
the cost to employers for lost time related to a workplace disabling
injury. Again, using 2003 BLS/NSC estimates, 115 million worker-days were
lost that year, including time lost for injuries suffered in 2003
(estimated at 70 million worker-days) and 45 million more worker-days from
injuries suffered prior to 2003. Where do those lost worker-days come
from? And who pays for that? Certainly, some of
those costs will be borne by your insurance carrier. And you can pass some
of these costs through to your customers. But just how elastic is your
insurer or your customer market? What sort of premium increase can you
expect from your insurer? Your customers may resist price increases,
particularly if you are in a cost-sensitive or highly competitive market,
or if the economic climate becomes lean. Much
More Than Money Is At Stake There are also
non-financial costs to consider. Your business reputation can be placed at
risk. What employer wants to see his or her business headlining the local What is the average
cost of implementing an employee safety program? It depends on several
factors, but a starting point in conducting an employee safety assessment
should consider, among other items:
Ask
the Professionals for Advice As you can see, this
is not a simple equation that yields an obvious answer. That is why your
organization should make use of well-informed safety professionals who
understand your business. They can complete a meaningful review of your
safety history and help you chart a course that will reduce injuries,
illnesses and lost time. A safety review and an improvement plan are part
of creating a culture that will help protect your employees as they strive
to help you meet your corporate goals. Employee
Safety is Good for Business Business leaders from
major “That
Little Fire” Cost $30 Million As an example of the
financial impact of even a seemingly minor safety-related event, Tebo
described a preventable, small fire at one of his company’s plants in
1997. Although no injuries resulted, the plant’s operations were
disrupted for the next three months. To meet its business commitments, the
company asked competitors to help supply their customers and some
long-term business was eventually lost. The net effect of “that little
fire” — which would not have occurred if existing safe work procedures
had been followed — was a $30 million loss. Bechtel echoed the
importance of employee safety when he commented: “Safety is one of our
core values. It’s good to work with customers that share that value. We
don’t work with a customer that doesn’t share that value that does not
have the same level of commitment. And safety should not be pushed down
the priority list because nothing happened.” Calculations
mentioned above say that each employee must produce $1,120 of goods or
services just to offset the costs of workplace injuries. Perhaps this can
help us estimate a breakeven point between the cost of building and
maintaining an appropriate employee safety program compared to the average
cost of an injury. This is an artificial point, of course, as there are
innumerable opportunities for those average costs to be substantially
different in your facility. But consider it a starting point. Would you be
willing to spend $900 or $1,000, if it saved you $1,120? That’s a better
than 10 percent savings return. Don’t
Take Short Cuts If your
organization’s safety history is worse than average, you should expect
to budget for more than this. The converse, however, is not true. That is,
just because your safety record may be better than average is not an
excuse for spending less. That is backwards looking, and there is no
guarantee of continued good performance. There are too many variables; the
management of change plays just as important a role in safety management
as it does in all other aspects for corporate oversight. Do not be lulled
into a false sense of success just because you have had a good year or
two. In
Summary: Employee Safety is Important to Everyone The safety and
protection of your employees carries greater financial implications than
many in corporate leadership roles recognize. It creates a ripple effect
that can influence immediate and long-term costs. Safety programs are a
good investment when even a single incident can bring a sizeable
enterprise to its knees. All of these financial issues are at stake, in
addition to the emotional impact on the injured person, his or her family,
co-workers and your entire organization. Consider a motor
vehicle accident involving a company employee while on business: more than
44,000 people lost their lives in crashes in the
Tim
Healey is the Director of Safety, Inspection Services of The Hartford
Steam Boiler Inspection and Insurance Company. Healey earned a
bachelor’s degree in management from the |
©1997 Hartford Steam Boiler Inspection and Insurance Co.
